International Trade 1st Edition By John Mclaren – Test Bank

McLaren “International Trade”
Test Bank
Chapter 11

The iPod is
Assembled in the USA by Apple
Assembled in China through Apple’s own subsidiary
Assembled in China by a Chinese outsourcing sub-contractor
Assembled in China by a Taiwanese company called FoxConn

Answer: D

In the way goods are manufactured nowadays
Each component of a good is made by one firm in one country
Each of the components of a good involves several firms in many countries
Each of the components of a good involves several firms in one country
Each of the components of a good involves only one firm but located in many countries

Answer: B

The difference between the world of Heckscher-Ohlin and the current world is that
Comparative advantage of making a component, not the good lies in one country
Comparative advantage of making a component involves specialized firms but still located in one country
Comparative advantage of making a component involves specialized firms located in more than one country
Comparative advantage of making a component involves only one firm but located in more than one country

Answer: C

Let wS be the wage rate of skilled labor and wU the wage rate of unskilled labor. Also let LS and LU be the amount of skilled and unskilled labor respectively. The United States can be called skill-labor abundant relative to China if
The wS/ wU is lower in the US than in China
The wS/ wU is higher in the US than in China
LS > LU in the US, but LS < LU in China
LS of the US > LS of China

Answer: A

According to traditional trade theory, if the US is skilled-labor abundant and China unskilled-labor abundant, trade between the two will
Raise both wS and wU in the US
Raise wS but lower wU in the US
Lower wS but raise wU in the US
Lower both wS and wU in the US

Answer: B

According to traditional trade theory, if the US is skilled-labor abundant and China unskilled-labor abundant, trade between the two will
Raise both wS and wU in China
Lower wS and raise wU in China
Raise wS and lower wU in China
Lower both wS and wU in China

Answer: B

According to traditional trade theory, if the US is skilled-labor abundant and China unskilled-labor abundant, trade between the two will
Increase inequality in both the US and China
Decrease inequality in the US, but increase inequality in China
Increase inequality in the US, but decrease inequality in China
Decrease inequality in both the US and China

Answer: C

According to the Feenstra-Hanson model, if the US is skilled-labor abundant and China unskilled-labor abundant, trade between the two will
Increase inequality in both the US and China
Decrease inequality in the US, but increase inequality in China
Increase inequality in the US, but decrease inequality in China
Decrease inequality in both the US and China

Answer: A

According to the Feenstra-Hanson model, if the US is skilled-labor abundant and China unskilled-labor abundant, trade between the two will
Decrease wS/wU in both China and the US
Increase wS/wU in both China and the US
Increase wS/wU in China but lower wS/wU in the US
Decrease wS/wU in China but raise wS/wU in the US

Answer: B

Let the making of a cellphone be broken up to three tasks in a descending order of skill-intensity: Making the chip and other internal components (Task 3), making the external casing (Task 2) and assembly (Task 1). If each of the Tasks uses skilled and unskilled labor in fixed proportions, then the vertex of the isoquants graphed with skilled labor on the vertical axis and unskilled labor on the horizontal axis will be such that
The one for Task 1 higher than Task 2 and the one for Task 2 higher than the one for Task 3
Will have the same height
Task 3 will be higher than Task 2, and Task 2 higher than Task 1 always along a vertical line
The one for Task 1 lower than Task 2 and the one for Task 2 lower than the one for Task 3

Answer: C